ISLAMABAD: Tobacco growers, traders and industry representatives on Monday demanded the immediate withdrawal of Rs390 per kilogram export tax on tobacco and called for a comprehensive review of the sector’s taxation policy, warning that current measures are pushing farmers into severe financial distress.
Speaking at a press conference, the group – joined by senior PTI leaders Asad Qaiser, Shahram Tarakai and others – said the issue was not political but an economic one affecting thousands of farming families, particularly in Swabi, which produces over 70 percent of the country’s tobacco crop.
Qaiser said he had no business interest in the tobacco trade but felt compelled to speak for farmers facing “extreme hardship.”
He criticised the taxation regime, arguing it had failed to achieve its fiscal objectives. According to him, government revenue from the sector had declined from Rs294 billion to Rs165 billion after higher taxes were imposed, calling the policy ineffective.
He further argued that excessive taxation was harming growers and local dealers while strengthening monopolistic market structures.
He warned that he, along with lawmaker Shahram Tarakai and other political leaders from Khyber Pakhtunkhwa, would pursue the matter through legal forums if required.
While condemning tobacco smuggling, he said enforcement responsibility lay with federal and provincial authorities and called for more practical anti-smuggling measures.
Tarakai said he had repeatedly raised proposals with the government but claimed tobacco growers and the domestic industry were still facing “discriminatory” policies.
He called for a balanced taxation system in which small businesses are taxed less and large corporations more, arguing current policy contradicted this principle.
He also alleged that two multinational companies had gained dominant control of the sector. Referring to his time in government, he said he had previously proposed Rs10 per unit tobacco levy to improve balance in the industry.
He urged authorities to reduce the tax burden and adopt “national interest” policies, saying political representatives across parties were aligned on the issue.
Industry representative Ayaz Khan said growers were suffering declining returns despite inflation. He claimed tobacco prices had dropped, with the current crop being purchased at rates around Rs180 per kilogram lower than last year.
He also alleged that local companies were being sidelined as multinational firms expanded their market share, resulting in cancelled domestic agreements.
He criticised the Pakistan Tobacco Board for weak regulatory enforcement, saying uncertainty was affecting both farmers and buyers.
He added that although tobacco exports had increased by 645 percent, government policies were still discouraging exports and weakening competitiveness.
He stressed that growers were not opposing taxation on cigarettes, but objected to measures they believed were harming farmers and export potential.
Participants also opposed a proposed minimum indicative price (MIP) of Rs525 per kilogram for Virginia tobacco in the 2026-27 budget, urging instead that prices reflect production costs, inflation, and farmer incomes.
They called on multinational companies to increase procurement of local tobacco to stabilise the market and ensure fair pricing.
They also demanded a third tier in the tobacco taxation structure to support domestic industry, restoration of suspended contracts, and immediate clearance of outstanding payments to growers and dealers.
The group urged the Federal Board of Revenue (FBR) to halt what they described as unnecessary raids and interference in business operations, and called on provincial and district authorities to avoid targeting warehouses and traders.
Copyright Business Recorder, 2026